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DEFECTIVE GOODS AND SERVICES

Do I have a claim?

You may have a claim for damages arising from a defective product if you suffered personal injury or if you suffered other losses as a result of the defect. Depending on the circumstances your claim may be for:

  • a refund of the purchase price of the goods or services
  • replacement of the goods
  • provision of services which remedy the defective services provided
  • claims for damages in respect of personal injury
  • claims for other losses which result from the defective goods or services.

What are my rights?

There are a number of different sources of rights for consumers if they have purchased defective goods or services. 

General Contract law

When you purchase goods or services you enter into a contract. In simple terms, a contract is a set of promises which the law will enforce. The promises which make up a contract are usually described as terms. If you suffer loss or damage because of defective goods which you have purchased under a contract, you may be able to obtain compensation on the basis that the seller has breached one of the terms of the contract.

For example, if a newsagent has contracted with you to deliver the Canberra Times six days a week and you only receive the paper on three days, the newsagent has breached a term of the contract and you would be entitled to claim the amount of your loss, that is the amount you have paid for papers you did not receive.

The general law of contracts is deficient in many ways and won't always cover the problems you might have with goods and services. For example, if a product has a defect you might not always be able to show that the defect is in breach of the terms of the contract. 

Implied contractual terms

Parliaments have attempted to provide some basic protection for consumers. The Sale of Goods Act, the Fair Trading Act and the federal Trade Practices Act imply extra terms into certain types of contracts. For example:

If a consumer makes it known to a seller the purpose for which they want to buy goods, and they rely on the skill and judgement of the seller, there is an implied term that the goods must be fit for that purpose.

The goods must be of "merchantable quality". This means that they have to be fit for the purpose for which such goods are usually bought. 

Negligence

In some circumstances you will also have rights against manufacturers of defective goods if you can prove that they were negligent. You must prove that:

  • They owed you a duty of care
  • The duty was breached
  • You suffered loss which was caused by the breach. 

Liability of Manufacturers and Importers for Defective Goods

The federal Trade Practices Act imposes liability on manufacturers and importers of defective goods for injury loss or damage caused by dangerous goods. These types of actions will generally be easier to prove than negligence. The Trade Practices Act and the state based Fair Trading Act may also give you a right to compensation if you have been supplied with goods which are subject to a ban or which do not comply with a safety standard prescribed by law. 

RIGHTS UNDER A CONTRACT

The general law of contracts derived from the decisions of courts over the years gives you some rights if there is a breach of a term of the contract. The general law may also give you some rights if the seller has engaged in certain types of conduct such as fraud.

There is also legislation which may give you additional rights under a contract in some circumstances by saying that in certain types of contracts extra terms will be implied or read into the contract by courts.

Some of these implied terms are:

  • If you sell goods, you are promising that you own them in the first place and have the right to sell them
  • That the goods are free from any debt or charge. You would not be able to sell something which still had money owing on it unless the buyer agreed to accept that before they entered into the contract.
  • That where you are selling goods by description, that is where the buyer has not seen the goods, they must match the description. Similarly, if the buyer has bought something on the basis of a sample, the goods supplied must match the sample.
  • If a consumer makes it known to a seller the purpose for which they want to buy goods, there is an implied term that the goods must be fit for the that purpose.
  • That the goods must be of "merchantable quality". This means that they have to be fit for the purpose for which such goods are usually bought.

What rights do I have if a term of the contract has been breached?

If a contract has been breached, the general law of contract provides a range of possible remedies, depending on how important the term was to the making of the contract.

It may be possible for you to:

  • Terminate the contract. An example of this would be where you refuse to accept goods delivered to you on the basis that they are defective.
  • Obtain damages. An example of this would be where you have incurred some expense in addition to the price of the goods in having them repaired.
  • Obtain specific performance. This means that the court may order the other party to carry out the things they promised to do under the contract.

RETURNING GOODS

When can I return goods?

You can return something for either a refund of the monies you paid, repair of the goods or replacement of the goods if the goods are defective, the goods are not what was described by the salesperson or in advertising, both generally or at the place where you purchased the goods, or you let the salesperson know why you wanted the goods and the goods are not fit for the purpose you told the salesperson you wanted them for.

You do not have a right to a refund because you bought goods which are the wrong size or you changed your mind about the colour or decided you just do not like the goods any more. Some stores will give you a refund or exchange the goods for other goods or give you a credit note. They are not obliged to. 

What if I return the goods and I only want a cash refund?

If the goods were faulty or inaccurately described or not suitable for the purpose you made known to the salesperson you can insist on a cash refund and you do not have to accept a credit note even if the store has a "No Refund" sign. Do not be deterred by no refund signs as no refund signs only apply if you bought the wrong sized colour or changed your mind. They do not apply when the goods are faulty, improperly described or not fit for the purpose which you told the salesperson you were buying them for. 

How long can I keep the goods for before I demand a refund?

This depends upon the nature of the goods. For instance it may be considered unreasonable to purchase an article of clothing to wear and wash it numerous times and then to ask for a refund because stitching comes loose or the like. Each case needs to be decided on its merits but there is a difference between a defect and fair wear and tear. The nature of fair wear and tear depends upon the type of good purchased and the use to which it is put. It also depends upon the type of materials of which the goods are made.

In some cases goods may need small repairs. If the seller is able to make those repairs without difficulty, the seller may be able to insist on repairing the good rather than replacing it. 

PRODUCT LIABILITY LAW

Product Liability Law

Often it is the manufacturer who you will want to be liable for defects in goods. The general law offers only limited opportunities to do this. Product liability law provides a statutory right of action against manufacturers. The law concerned is the federal Trade Practices Act. This legislation gives persons who have suffered injury, loss or damage caused by dangerous goods rights of action against manufacturers and importers. The Act only applies to goods supplied after 9 July 1992. 

Who is liable?

To sue a manufacturer under the Trade Practices Act the manufacturer has to be a corporation. .Importers are also caught by these provisions of the Trade Practices Act There is no state-based equivalent which would give you rights against sellers who are not, for Constitutional reasons, covered by federal law, such as individual traders or partnerships. If you do not know who the manufacturer of the goods is it is possible to serve a written request on the supplier of the goods to provide information about the manufacturer or supplier who supplied the goods to them. If the supplier does not provide the information requested this may result in them being deemed the manufacturer for the purposes of the Act. 

When will a corporation be liable?

Manufacturers are liable when they supply goods which are defective and which cause loss. "Supply" includes sale, exchange, lease, hire or hire-purchase.

Goods have a "defect" for the purposes of the Act if their safety is not such as persons generally are entitled to expect. The legislation sets out a number of factors which will be relevant to determining whether goods have a defect:

  • The manner in which and the purposes for which they have been marketed
  • Their packaging
  • The use of any mark in relation to them
  • Any instructions or warnings with respect to doing or refraining from doing anything with or in relation to them
  • What might reasonably be expected to be done with or in relation to them
  • The time when they were supplied by the manufacturer.
  • Manufacturers may be able to escape liability if:
  • The defect did not exist when the goods were supplied
  • The defect only existed because the manufacturer was complying with a mandatory standard.
  • The defect could not have been discovered given the state of scientific or technical knowledge when the manufacturer supplied the goods
  • The defect is attributable to the design, markings on, or instructions given with goods where the manufacturer only manufactured a component.

Who can sue under product liability law?

The people who can sue under the product liability provisions of the Trade Practices Act are individuals who have suffered loss or injury due to defective goods, including:

  • A person who has suffered injuries because of the defective goods
  • A person who has suffered loss because of injuries or death suffered by another person because of the defective goods
  • A person who used or intended to use goods that were damaged or destroyed because of the defective goods. The goods must be of the kind that are ordinarily acquired for personal, domestic or household use.
  • A person who used or intended to use land, buildings or fixtures ordinarily acquired for private use that were destroyed or damaged because of the defect.

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